WASHINGTON — President Obama signed the U.S. Department of Defense (DOD) appropriations bill on Saturday, which included $125 million to continue through February 28, 2010 the enhancements made possible through the American Recovery and Reinvestment Act (ARRA) to SBA’s two largest loan programs {504 and 7(a)}. The SBA said the additional funding will support an estimated $4.5 billion in small business lending.
New approvals of loans with the higher guarantee and reduced fees made possible by ARRA are expected to begin by December 28, 2009. Loan applications from borrowers who chose to be placed in the SBA’s Recovery Loan Queue will be funded first, followed by new loan approvals beginning on or before December 28, 2009.
“This Administration and Congress recognize that these key programs were successful in helping jump-start the economic recovery for America’s small businesses,” said SBA Administrator Karen Mills. “The increased guarantee and reduced fees on SBA loans helped put more than $16.5 billion in the hands of small business owners and brought more than 1,200 lenders back to SBA loan programs. The extension of these programs through February 2010 is important to continuing our path toward recovery and will mean thousands more small business owners have access to the credit they need.
“Just two weeks ago, President Obama laid out key aspects of his jobs plan, including significant ongoing support for small businesses. We will continue to work with Congress on moving those proposals forward, including extending these loan enhancements as the President has called for, to ensure that small business owners have the tools they need to drive economic growth and create jobs in communities all across the country.”
As part of ARRA, SBA received $730 million, which included $375 million to increase the SBA guarantee on 7(a) loans to 90% and to waive borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on November 23, 2009.
The extension included in the DOD bill authorizes the higher guarantee levels through February 28, 2010. The fee relief is authorized until this additional funding is exhausted or by the end of the fiscal 2010 year, whichever comes first. As was the case in November 2009, SBA will transition into a queue system as the funds start to wind down in order to ensure the maximum simulative effect of the programs and disbursement of funds.